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Colt1911 [192]
3 years ago
6

A short forward contract that was negotiated some time ago will expire in 4-month and has a delivery price of $42.25. The curren

t forward price for the 4-month forward contract is $42.75. The 4-month risk-free interest rate (with continuous compounding) is 7.90%. What is the value of the short forward contract? Answer with two decimal digits accuracy and the correct sign. Example: -11.92
Business
1 answer:
padilas [110]3 years ago
8 0

Answer:

the  value of the short forward contract is -0.49

Explanation:

the computation of the value of the short forward contract is shown below:

= (Delivery price - current forward price)× e^(risk free interest rate × no of months ÷ total number of months)

= ($42.25 - $42.75)× e^(-7.90% × 4÷12)

= -0.49

Hence, the  value of the short forward contract is -0.49

Therefore the same should be considered  

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The supply of "cash" (paper and coin) is produced by the U.S. Mint and the Bureau of Engraving, but the _________________ contro
maksim [4K]

Answer:

Federal Reserve

Explanation:

The Federal Reserve (FED) distributes new currency through its 12 Federal Reserve Banks. Depository institutions (e.g. savings bank, commercial bank, savings and loan association, or credit union) buy currency from the Federal Reserve Banks when they need extra cash and they deposit cash when they have too much cash.

8 0
4 years ago
Read 2 more answers
Assume a contract for the sale of goods specifies that payment is to be made 15 months after delivery of a product. The seller i
Ede4ka [16]

Answer:

The correct Answer is B.

The seller is likely to recognize interest revenue.

Explanation:

What is interest revenue?

Interest revenue is the earnings that an entity receives from any investments it makes, or on debt it owns.

The Logic here posits that for every money invested or loaned out, some interest should accrue. The goods which have been taken delivery of to the buyer becomes a debt which normally should be paid with no strings attached.

However, because of the term in the contract which stipulates, that the payment will be made after 15 months, the concept of the <em>Time Value of Money</em> which is the bedrock of the Principle of Interest Revenue engages.

The Time Value of Money is a basic financial concept that holds that money in the present is worth more than the same sum of money to be received in the future. This is true because money that you have right now can be invested and earn a return, thus creating a larger amount of money in the future.

It therefore follows that if a party in a business transaction is being asked to forfeit the time value of money then it ought to be compensated for such, hence Interest Revenue.

Cheers!

8 0
3 years ago
"Which of the following is a significant operation interface that distinguishes a service supply chain from a product supply cha
dimulka [17.4K]
C. supplier relationship management is the answer
6 0
4 years ago
A specific parcel of real estate has a market value of $160,000 and is assessed for tax purposes at 75% of market value. The tax
Whitepunk [10]

Answer:

$4,800

Explanation:

property taxes are calculated using the assessed value, in this case the county will use $160,000 x 75% = $120,000

if the tax rate is 4% of assessed value, then the total property tax bill = $120,000 x 4% = $4,800

Generally, property taxes are collected by counties or municipal governments and they are used to fund school districts, libraries, fire departments, parks, etc.

8 0
4 years ago
Assume the real rate was 9.5% and the inflation rate was 4%. Using the Fisher Effect, what was the nominal rate?
Paul [167]

Answer:

13.88%

Explanation:

According to the fisher effect

(1 + nominal rate) = (1 + real rate) x (1+ inflation rate)

= (1.095) x (1.04) = 1.1388

(1 + nominal rate) = 1.1388

Nominal rate = 1.1388 - 1 = 0.1388 = 13.88%

6 0
3 years ago
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